Final results will show record year on year increase in revenue and profit

27-Jun-2018

1pm plc is delighted to announce the following
strong trading update ahead of the publication of its final audited results for
the financial year ended 31 May 2018, which are scheduled to be announced in
early September 2018.

The unaudited trading results for the year
demonstrated further strong growth in both revenue and profits compared with
the prior year. Group revenue was slightly ahead of market expectations with
profits in line following further investment in operations.

Highlights• Deal origination for the year in excess of
£140m, an increase of 70%, of which 44% was funded on balance sheet and 56%
broked-on, a similar mix to the prior year.• Revenue for the year expected to be £30m, an
increase in excess of 75%, of which over 30% is organic growth.• Over 50% of revenue for the current year to
31 May 2019 is already secured as “unearned income”.• Basic earnings per share expected to increase
by more than 20% notwithstanding the increase in shares in issue in June 2017
to fund acquisitions.• Own-book portfolio as at 31 May 2018 expected
to be in excess of £130m, up 50%, of which 10% is organic growth.• Aggregate borrowing facilities, i.e.
wholesale funding to deploy, in excess of £160m, an increase of more than two
times over the prior year.• Blended cost of borrowing reduced to less
than 4.0% (2017: approximately 5.3%) and will reduce further as the facility
with British Business Bank is utilized.• Improved Net Interest Margin compared with
prior year.• Net write-off experience in the year in line
with the prior year, reflecting the group’s cautious approach to underwriting
and provisioning unaudited.

Strategy1pm’s strategy is to focus on providing or
arranging the finance which UK SMEs require to fund their businesses. The SME
market continues to provide substantial scope for organic growth for the
group’s multi-product range, which includes asset, vehicle, loan and invoice
finance facilities. An operational synergy arising from being a multi-product
provider is the opportunity to cross-sell among the various trading entities in
the group. A cross-selling culture is being embedded at all sites and the rate
of deal origination from cross-selling is increasing month on month. The group
operates a “hybrid” lending and broking model, which is fundamental to the
group’s cautious risk management strategy and which enables it to optimize
business levels through market and economic cycles.

Borrowing facilitiesThe group’s raw material is cash. The group is
pleased to report continuing and increasing support from the providers of
wholesale funding facilities and debt investors. As at 31 May 2018, total
borrowing facilities stood in excess of £160m (2017: £74.5m), an increase of
over two times. With these facilities in place the group has the headroom it requires
to fund its planned growth over the next 12 to 24 months. The group saw a
reduced cost of borrowing in the year to less than 4.0% (2017: approximately
5.3%) and was therefore able to record an increase in Net Interest Margin.

IntegrationThe group has successfully completed seven
acquisitions in the past three years. Whilst new business origination
activities at each acquired company have deliberately not been changed other
than the cross-selling initiative, the company has integrated all the business
support functions including marketing, underwriting, compliance, funding and
treasury, accounting, and human resources, which are now operated on a
group-wide basis. The group is currently implementing its “Platform1” systems
project aimed at harmonizing its digital capability across all of the group’s
entities and harnessing the benefits of ‘FinTech’ to enhance service for
customers. This project will be completed during the current calendar year.

ManagementGiven the evolving integration and development
of the group, with effect from the start of the current financial year, 1 June
2018, Ed Rimmer has taken on an expanded role as chief operating officer for
the group encompassing his existing role as managing director of the commercial
finance division. Also with effect from 1 June 2018 and in accordance with the
planned succession in the asset finance division, Mike Nolan has stepped down
from his day-to-day duties pending his previously announced retirement in
December 2018.

Ian Smith, chief executive officer, commented:

“The preliminary results for the year ended 31
May 2018 mark the successful culmination and implementation of the
buy-and-build strategy pursued over the past three years, the strength of our
operating model of being both a funder and a broker and our cautious approach
to risk. These results reflect both the organic growth we anticipated and the
expected growth from our strategic acquisitions and have produced a strong
uplift in earnings per share.

“The group is now better placed than ever to
benefit from further organic growth and the operating synergies that flow from
being a multi-product provider of finance to the resilient UK SME sector. We
look forward to continuing to build value for our shareholders.”